Charles Knapp, interim dean of the University of Georgia’s Terry College of Business, discusses the state’s economy during the annual Georgia Economic Outlook luncheon in Atlanta on Wednesday. (Photo by Andrew Davis Tucker/University of Georgia)
ATHENS — Balanced job growth should make Georgia’s economy less susceptible to recession in 2014, with the outlook calling for a growth rate that is better than the national average.
According to the forecast prepared by the Selig Center for Economic Growth, Georgia’s economy should grow at an inflation-adjusted rate of 3 percent in 2014, bringing with it a 1.8 percent increase in jobs. That compares to the expected national growth rate of 2.3 percent next year, with an overall 1.5 percent increase in jobs.
The state’s unemployment will remain high at 8 percent, a half-point improvement, and the risk of recession is expected to drop from 40 percent this year to 30 percent in 2014.
Charles B. Knapp, interim dean of the Terry College of Business and president emeritus of the University of Georgia, speaking at the Georgia Economic Outlook Wednesday in Atlanta, said the state’s growth will be buoyed by rising home prices, smart economic policies and new jobs.
“Private sector job growth will be well balanced in 2014, which reduces the risk of recession because Georgia’s growth will not be dependent on the performance of just one or two big economic sectors,” Knapp said. “The fastest job growth will occur in construction, followed by professional and business services, and mining and logging.”
If the forecast holds true, Georgia’s growth rate will exceed the 2 percent it experienced last year, with UGA officials saying that development policies such as the deal-closing fund set up by the Legislature put the state in a position to make up the jobs it lost in the recession by the middle of 2015.
“One factor behind the broadening base of job growth is the upturn in manufacturing activity, which is noteworthy given that since the turn of the millennium, Georgia has lost four out of every 10 manufacturing jobs,” Knapp said. “In 2012 and 2013, we’ve seen major project announcements in aircraft, automobile, construction equipment, life sciences and flooring manufacturing.”
During the year, UGA economists expect the state to gain 4,100 manufacturing jobs and see the number of single-family home starts rise by 36 percent. Nominal personal income should be up by 5 percent. Metro Atlanta should see 2.4 percent job growth with 57,800 new jobs in 2014.
The state’s population rate also is projected to outperform the expected national average of 0.9 percent. Georgia, which attracted 29,000 new residents in 2009, is expected to add 61,000 people in the coming year, a population growth rate of 1.3 percent.
The downsides, the report showed, are in the areas of education and public sector employment.
The growth Georgia’s private sector will be offset some by losses in public jobs. With federal spending comprising 6.9 percent of Georgia’s gross domestic product, federal spending cuts will have a significant impact. Reductions in military spending, the lifeblood of many Georgia communities including Albany, where the Marine Corps Logistics base is located, will be especially harmful, the economists said.
Georgia also continues to lag the nation in secondary education, with the state’s eighth-graders ranking 40th among states in math, 34th in reading, 31st in science and 27th in writing.
“To fully leverage Georgia’s newly restructured private-sector economy we need to adjust our priorities to put much greater emphasis on educational achievement,” Knapp said. “That will be critical in terms of improving Georgia’s competitiveness, which ultimately determines our standard of living.”
Nationally, the economists forecast that wages will increase 2 percent, while benefits will rise 4 percent mainly because of health insurance costs. Existing home prices are expected to rise 5 percent with a 25 percent jump in new-home starts. The unemployment rate will be lower than Georgia’s at 7.2 percent and consumer spending should rise 2.2 percent.
The nation’s risk of falling back into a recession is the same as Georgia’s at 30 percent. The recession risk continues to hinge upon federal fiscal policy, oil price shocks and financial panic from the European Union, the economists said.
The Economic Outlook series travels to 12 cities throughout the state. The UGA Terry College of Business series is scheduled to be in Albany on Feb. 13.